Sears Tends To City Side Of Business Retail Giant Takes Another Look At Stores In Urban Locations

Over the last few years, Sears, Roebuck and Co. has lavished attention and spent millions of dollars opening hundreds of off-the-mall stores - small, free-standing outlets that sell specific products such as hardware, furniture and home goods and car tires and batteries.

At the same time, Sears was busy overhauling its full-line department stores in huge malls. Stores were remodeled and filled with softer-side apparel.

Now, with its small-store expansion and other turnaround efforts paying off, the Hoffman Estates-based retailer is getting the city side of Sears up to speed.

In the last 18 months, Sears opened three urban stores - in Oakland, Calif., and Yonkers and Rego Park, N.Y. A second Brooklyn store will open in November and Sears is part of a bid for a store site on Manhattan’s Upper West Side.

Allan Stewart, president of Sears’ retail stores, says the company has also been scouting for sites for department stores in Detroit, Philadelphia, San Francisco, Washington and Chicago.

Sears is even considering putting some of its smaller, specialized stores such as hardware or auto parts in urban locations.

“It makes a lot of sense,” says retail analyst Philip Abbenhaus of KPMG Peat Marwick LLP in St. Louis.

“Sears is reaching an underserved segment of the retail market and it fits well with Sears’ demographics,” says Abbenhaus. “As everybody raced out to suburbia, stores left a lot of people behind with few good places to shop. Try to buy electronics in a downtown area,” he added.

Abbenhaus says that Sears is making “a good-citizen move” by being in neighborhoods, “but Sears wouldn’t do it if it weren’t a source of significant revenue. This is one of those things that Arthur (Martinez) has been tinkering with and it sure looks like a good idea.”

Martinez, chairman and chief executive of Sears, has made the company the No. 1 department-store chain in the country by knowing what to do away with and what to build up - and that is now city stores.

“Our urban stores are very successful and are performing above expectations,” he said last week.

Sears’ new urban stores are doing well, indeed. Stewart says that each of the three averages between $75 million and $100 million in annual sales. That’s almost triple the chainwide average.

At one time, Sears had dozens of urban stores. But when Martinez began reshaping the then-struggling Sears in 1993, he closed 113 stores, including 7 in urban markets. With the recent additions, Sears now has 19 urban stores.

Stewart says a slowdown in mall construction spurred Sears to begin its search for city sites several years ago. Then, too, malls are losing some appeal as shopping destinations as they become restaurant and entertainment meccas.

“People want the convenience of shopping in their own neighborhoods,” says Stewart.

Among the things that Sears looks for when it’s searching for a city site: high population density; diversity; few other major retail outlets.

Essential for a city site, says Stewart, is parking space. “And the store has to be where people live, work and shop.”